School-based health services are one of the smartest investments a district can make—but most states aren’t taking full advantage of the funding available. Medicaid and CHIP cover more than half of America’s children, yet only 16 states currently maximize school-based Medicaid reimbursements. That leaves millions in funding on the table.
At NEMB, we help schools and state agencies unlock Medicaid dollars that fuel student health services—from mental health support to preventive care. With new federal guidance and dedicated funding, there’s never been a better time to expand access and secure long-term reimbursement.
Why School-Based Healthcare Matters
Students spend more than 1,000 hours per year in school buildings. Delivering care where kids already are removes transportation barriers and normalizes treatment in familiar environments. In fact, students are 6x more likely to receive mental health services when those services are offered in school.
School-based care improves academic outcomes, reduces chronic absenteeism, and ensures early intervention. For many children—especially in underserved areas—this is the only healthcare they’ll reliably receive.
Medicaid & CHIP: A Quick Refresher
- Medicaid is a joint federal-state program that covers low-income individuals, including children.
- CHIP covers children whose families earn too much for Medicaid but can’t afford private insurance. Together, these programs act as a safety net and fund a wide range of services, including behavioral health, therapy, screenings, and nursing.
The Opportunity: Medicaid Reimbursement in Schools
Medicaid reimburses schools for eligible health services provided to Medicaid-enrolled students. Traditionally, this applied only to students with an IEP (Individualized Education Program) or IFSP (Individualized Family Service Plan). But since the 2014 reversal of the “free care rule,” schools can now bill Medicaid for services delivered to any Medicaid-enrolled student.
As of October 2023, 25 states have updated their Medicaid plans to reflect this expanded access—but only 16 have fully implemented it.
Eligible Services Include:
- Speech, occupational, and physical therapy
- Behavioral health services and counseling
- Screenings, vaccinations, and check-ups
- Nursing and chronic condition management
- Audiology and specialized supports
Who Can Deliver Services?
Thanks to 2023 CMS guidance, states now have greater flexibility in credentialing school-based providers. For example:
- School psychologists and social workers may deliver reimbursable services without traditional clinical licenses, if certified in the educational setting.
- This helps address provider shortages while maintaining service quality.
How States Can Expand Access (And Why They Should)
Most states can increase Medicaid reimbursement significantly—but it requires coordination, planning, and policy updates. Here’s how to get started:
1. Review and Update the State Medicaid Plan
Work with your State Educational Agency (SEA) and State Medicaid Agency (SMA) to identify where current language limits school-based claims. This is often the biggest hurdle.
2. File a State Plan Amendment (SPA)
An SPA formally updates how Medicaid operates in your state. Use the CMS School-Based Services SPA Toolkit for templates, checklists, and best practices.
3. Leverage CMS Guidance
The 2023 School-Based Services Reference Guide outlines how to:
- Expand eligible providers
- Bill for more types of care
- Reduce documentation burden
- Simplify administrative processes
4. Encourage Cross-Agency Collaboration
Strong partnerships between SEAs, SMAs, and Local Education Agencies (LEAs) are essential. Use the SBS Technical Assistance Center to streamline this work and build local capacity.
Smart Billing: Strategies for District Success
Fee-for-Service (FFS) vs. Cost Settlement
- FFS: Submit claims per student service at a set rate
- Cost Settlement: Reconcile FFS claims annually for actual service costs. CMS now allows roster billing and other models to simplify the process.
Medicaid Administrative Claiming (MAC)
MAC reimburses districts for the admin work that supports Medicaid (e.g., enrollment help, referrals). Most schools participate in quarterly time studies to track eligible activities.
Avoiding Common Pitfalls
- Documentation matters. Use centralized systems and train staff regularly.
- Audit risk is real. Inaccurate or missing records can trigger repayments.
- Compliance starts with clarity. Establish clear processes early.
What Success Looks Like
- Chicago Public Schools: Receives $35–$40 million annually through school-based Medicaid
- Illinois: Secured an additional $17.8 million after expanding its SBS program
- 18 States: Received CMS grants up to $2.5 million each to support Medicaid implementation
This isn’t theoretical. States that take action see millions in additional funding—and healthier students as a result.
Final Takeaway: Medicaid is More Than a Revenue Stream
It’s a chance to improve access, equity, and outcomes—especially for students in under-resourced communities. With new federal funding, updated CMS guidance, and increased flexibility around provider qualifications, now is the time to act.
NEMB helps districts and agencies:
- Navigate Medicaid billing processes
- Streamline provider credentialing
- Secure sustainable funding for school-based care
- Maximize reimbursements with compliant documentation
Ready to Expand Medicaid-Funded Health Services in Schools?
Partner with NEMB to unlock the full potential of school-based Medicaid programs. We’ll help you build the right plan, navigate complex requirements, and create a funding model that grows with your students’ needs.
FAQs
Q1: What is the “free care rule” and why does it matter?
It previously prevented Medicaid reimbursement for services offered to all students. The 2014 reversal opened the door to broader billing eligibility.
Q2: Can schools bill for mental health services even if a student doesn’t have an IEP?
Yes—if the student is enrolled in Medicaid and the state allows reimbursement under updated guidelines.
Q3: What’s the easiest way to start expanding Medicaid school-based services?
Start with a review of your State Medicaid Plan and collaborate with your SEA and SMA. Then submit a State Plan Amendment if needed.
Q4: How much can districts realistically receive in Medicaid reimbursement?
That varies by state and service delivery—but large districts like Chicago bring in up to $40 million/year, and many small districts recoup significant funding through FFS and MAC.
Q5: How can NEMB support our state or district?
We offer consulting, compliance reviews, training, and implementation support to help you secure sustainable funding and expand student access to care.
